Smith v. The Queen, 84 DTC 6164, [1984] CTC 105 (FCTD)

Collier, J:—This was a motion, under Rule 344, for special directions in respect of the costs of this action. There is a similar motion in a companion action, Smith v The Queen, T-2444-80.

The two actions were heard together by me at London, Ontario, over a period of seven days, in February 1983. Judgment was given on February 22, 1983. This motion was subsequently brought. I reserved decision.

The plaintiffs request the following directions:

1. There be payment of a reasonable sum for the services of experts, engaged by the plaintiffs, who prepared evidence on behalf of the plaintiffs, and gave expert testimony at trial.

2. An increase in taxable party and party costs above those permitted by Tariff B.

3. An allowance for printing costs of $2,594.49, in respect of material prepared for trial.

At the outset, I have to determine whether the plaintiffs are entitled to an order for costs, at all. It is necessary to review the history of this litigation.

For the taxation year 1975, the Minister of National Revenue substantially increased the income tax said to be payable by the plaintiff taxpayers, Campbell and Smith. The increase arose because of the Minister’s calculation of a taxable capital gain. It arose out of the disposition of real property by each taxpayer, Campbell and Smith had owned, before 1971, unrelated properties in the same area of southern Ontario. In 1975, in separate transactions, they sold their properties.

The essential dispute between the taxpayers and the Minister was as to the fair market value of the properties on December 31, 1971 (Valuation Day).

The Minister, in his tax assessments, put those values as follows:

The assessments were based on appraisals made by one H E Longstaff.

The taxpayers appealed to the Tax Review Board. The chairman determined the Valuation Day values as follows:

The taxpayers then appealed to this court.

The Minister of National Revenue, in the pleadings here, reasserted the original position taken, based on the Longstaff appraisals:

The Minister did not, at the trial before me, rely on the Longstaff appraisals. Another appraiser gave evidence. He put somewhat higher values on the properties.

I accepted, by and large, the values put forward by that appraiser, Hughes. I fixed the December 31, 1971 values, as follows:

The defendant says, in response to the present motion, the plaintiffs did not reap any substantial success on the appeal to this court; there should be no costs to the plaintiffs; any costs should be awarded to the defendant.

I do not accept that submission.

The plaintiffs, before me, successfully attacked the valuations, as pleaded, of the Minister. The Minister had chosen to rely on his original assessments. He did not put forward, either by way of reassessment or pleading, the new values arrived at by the witness, Hughes.

It is irrelevant, in my view, that Campbell, in this court, was not able to substantiate the value arrived at, in respect of his property, by the chairman of the Tax Review Board.

The proceedings in this court were by way of a new trial. The assessments and the values asserted in the pleadings were, as I have said, those asserted in the Minister’s original assessment; the plaintiffs have succeeded in having those assessments varied. More favourable ones have been substituted.

I have little difficulty in concluding the plaintiffs are entitled to their taxable costs.

I turn now to the particular matters set out in the notice of motion.

Expert Fees

This aspect of the motion was not seriously opposed. Both sides had called expert evidence.

There will be a direction the expert witnesses, Norman Pearson and Joseph Strung, are entitled (pursuant to ss 4(2) of Tariff A) to reasonable payment for the services performed by them in preparing to give evidence and in giving evidence. If the parties cannot agree on what is “reasonable payment”, then the taxing officer shall determine the amount.

An Increase in the Taxable Party and Party Costs

I have no doubt there was considerable time spent in the preparation for trial of these two actions. But that occurs in many cases heard in this court.

It was contended on behalf of the plaintiffs these two cases were in the nature of a test case; other appeals, by other taxpayers, against similar assessments, were pending. The evidence on that point is unsatisfactory and contradictory. I am unable to hold these two actions were, indeed, test cases. Even if they were, I am not persuaded, on the facts and circumstances here, that any increase in the tariffs would, on that ground alone, be justified.

Volume of work in preparation, considered alone, or in conjunction with factors such as the difficulty and importance of the case, do not necessarily provide a basis for the exercise of a judicial discretion in favour of increasing costs. See: Smerchanski v MNR, [1979] 1 FC 801; MacMillan Bloedel (Saskatchewan) Ltd v Consolboard Inc (1982), 58 CPR (2d) 100; and Warwick Shipping Limited v The Queen, (FCA, unreported A-26-81, September 9, 1983).

I see no special or deserving circumstances, in these two cases, warranting an increase over the tariff.

That part of the motion is dismissed.

Printing Costs

This was a disbursement incurred by the plaintiffs in respect of the preparation, out of their solicitor’s office, of various exhibits and other materials. Rule 2(2)(b) of Tariff B provides as follows:

2. The following may be allowed unless the Court otherwise directs:

2. Disbursements

(b) such other disbursements may be allowed as were essential for the conduct of the action.

It seems to me the decision as to whether these printing costs should be allowed, and the reasonableness of the amount, are matters for the taxing officer. They do not require any direction from this court.

That part of the motion is dismissed.

The net result is each plaintiff will recover taxable party and party costs from the defendant. There will, however, be only one set of counsel fees at trial. They shall be taxed in the Campbell action.

There has been divided success on this motion. There will be no costs, in respect of it, to any party.

These reasons will apply in the Smith action.